Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q1 2021 Earnings Presentation
53 slides from Simmons First National's earnings presentation, Apr 20, 2021
Slide 1: Contents
Contents 4 Loan Portfolio & Asset Quality 14 Capital, Deposits, Liquidity & Investments 21 1 st Quarter Earnings Highlights 32 Corporate Profile and Company Highlights 41 Appendix 1 st Quarter 2021 Investor Presentation | NASDAQ: SFNC
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
2 Forward - Looking Statements and Non - GAAP Financial Measures Forward - Looking Statements . Certain statements by Simmons First National Corporation (the “Company”, which where appropriate includes the Company’s wholly - owned banking subsidiary, Simmons Bank) contained in this presentation may
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This page intentionally left blank Will Zalatoris 2021 Masters 2 nd Place, nine under par
Slide 4: Loan Portfolio and Asset Quality
LOAN PORTFOLIO AND ASSET QUALITY 4
Slide 5: Loans – Including PPP Loans
Loans – Including PPP Loans as of December 31, 2020 as of March 31, 2021 $ in millions Balance $ % of Total Loans Balance $ % of Total Loans Classified $ Non - performing $ ACL % Unfunded Commitment $ Unfunded Commitment Reserve Total Loan Portfolio Consumer - Credit Card 189 1% 175 2% 1 1 1.2% - Co
Slide 6: Loans – Excluding PPP Loans
Loans – Excluding PPP Loans as of December 31, 2020 as of March 31, 2021 $ in millions Balance $ % of Total Loans Balance $ % of Total Loans Classified $ Non - performing $ ACL % Unfunded Commitment $ Unfunded Commitment Reserve Total Loan Portfolio (1) Consumer - Credit Card 189 2% 175 2% 1 1 1.2%
Slide 7: Loan Pipeline Trend by Category
Loan Pipeline Trend by Category (1) 7 $ in millions (1) Quarterly amounts adjusted for branches sold in South Texas and Colorado during 2020. $1,009 $641 $219 $192 $247 $487 $341 $220 $90 $112 $250 $408 $347 $291 $72 $70 $177 $285 5.10% 4.70% 4.10% 4.37% 4.12% 3.81% 0.00% 1.00% 2.00% 3.00% 4.00% 5.0
Slide 8: Mortgage Loan Volume – Closed and Pipeline
Mortgage Loan Volume – Closed and Pipeline 8 $ in millions $126 $224 $243 $181 $183 $319 $408 $399 $326 $77 $92 $86 $51 $145 $239 $307 $214 $166 $0 $100 $200 $300 $400 $500 $600 $700 $800 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Mortgage Closed Loan Volume Mortgage Pipeline Volume Mortgage Loan
Slide 9: Credit Quality Focus
Credit Quality Focus 9 COVID - 19 Loan Modification Update ▪ COVID - 19 Modification requests have slowed significantly. ▪ Remaining loans under COVID - 19 modifications total $153,000,000 and consist of 86 loans. – Primarily centered in: • Consumer / Mortgage – 49 loans totaling $4,000,000 • Hotel
Slide 10: Commercial Real Estate
Commercial Real Estate 10 Commercial Real Estate Concentrations ▪ Construction and Land Loans as Percent of Capital – 60% (reduced from high of 108%). ▪ Total Commercial Real Estate as Percent of Capital – 227% (reduced from high of 335%). ▪ Strategic portfolio management plans in place to ensure di
Slide 11: PPP Loans
Loan Balance $ in millions Original Balance 3/31/21 Balance # of Loans Originated Net Fees Remaining PPP Phase I $ 976 $ 570 8,208 $ 7.9 PPP Phase II 240 228 2,855 11.0 Total $ 1,216 $ 798 11,063 $ 18.9 PPP Loans 11 PPP Summary ▪ PPP Loans are assigned a risk weighting of zero percent. ▪ Average loa
Slide 12: Asset Quality Trends
ASSET QUALTY TRENDS Credit Quality $ in millions Source: S&P Global Market Intelligence 2013 - 2020 (which metrics are as of December 31 of the relevant year) (1) ALLL for 2013 – 2019 and ACL 2020 – 2021 Q1. (2) YTD annualized net charge - offs. Non - performing Loans / Loans 3.33% 2.50% 1.44% 1.68%
Slide 13: Allowance for Loan Losses and Loan Coverage
ALLL or ACL Loan Discount Total Loan Coverage ACL (ALLL)/ Loans ACL (ALLL)/ Loans excluding PPP (1) ALLL as of 12/31/19 $ 68.2 $ 87.3 $ 155.5 0.47% 0.47% CECL Day 1 Adoption Impact 151.4 (87.3) 64.1 2020 Provision Expense 82.5 82.5 2020 Net charge - offs (64.1) (64.1) ACL as of 12/31/20 $ 238.0 $ 0
Slide 14: Capital, Deposits, Liquidity and Investments
CAPITAL, DEPOSITS, LIQUIDITY AND INVESTMENTS 14
Slide 15: Regulatory Capital Ratios
9.8% 10.2% 10.9% 13.4% 14.1% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2017 2018 2019 2020 2021 Q1 W ELL C APITALIZED 8.0% 11.4% 13.4% 13.7% 16.8% 17.5% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2017 2018 2019 2020 2021 Q1 9.8% 10.2% 10.9% 13.4% 14.1% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 201
Slide 16: Stock Repurchase Program
Stock Repurchase Program 16 $10.1 $93.3 $0.0 $0.0 $20.0 $3.1 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 Q419 Q120 Q220 Q320 Q420 Q121 REPURCHASE BY QUARTER (1) ▪ Summary of stock repurchases since reinitiating program in Q4 2019: – $127 million – 6.5 million shares or about 5.7% of o
Slide 17: Book Value & Tangible Book Value
(1) As of December 31, except where otherwise stated. (2) Figures based on tangible book value (which excludes goodwill and other intangible assets) are non - GAAP measurements. See Append ix for non - GAAP reconciliations. 17 Book Value & Tangible Book Value BOOK VALUE ($ IN MILLIONS) (1) TANGIBLE
Slide 18: Deposits
▪ Interest Rates – In March 2020, the Fed reduced the Fed Funds target rate by 150 basis points. ▪ Interest Bearing Transaction Deposits – Rates were lowered during the latter part of the first quarter of 2020. ▪ Time Deposits – Rates were lowered during the latter part of the first quarter of 2020.
Slide 19: Liquidity
▪ Approximately $3.9 billion in Cash and Cash Equivalents as of 3/31/21. ▪ Over $5 billion of liquidity available in secondary borrowing sources as of quarter end. ▪ Substantial access to brokered deposits. ▪ Loan/Deposit Ratio of 67% as of 3/31/21 (63% excluding PPP loans (1) ). Liquidity $491 $655
Slide 20: Investment Security Portfolio
$ in millions Investment Security Portfolio ▪ In Q1 2020, sold ~$1 billion of investment securities to: – De - risk the balance sheet – Create liquidity – Recognize gains of over $30 million – Increase capital ▪ In Q3 2020, sold ~$500 million of investment securities. – Projected calls for the next
Slide 21: 1st Quarter 2021 Earnings Highlights
1 st Quarter 2021 Earnings Highlights 21
Slide 22: Financial Highlights
Note: Core figures (excluding Core NIM) exclude non - core income and expense items (e.g., early retirement program costs, gain on sale of banking operations, merger related costs and branch right - sizing costs). Core NIM excludes purchase accounting interest accretion. Core figures, as well as fig
Slide 23: 2021 Financial Highlights
As of and for the three months ended March 31, 2021 (1) Core figures (excluding Core NIM) exclude non - core income and expense items (e.g., early retirement program costs, gain on sale of branches, merger related costs and branch right - sizing costs). Core NIM excludes purchase accounting interest
Slide 24: Net Interest Income
HISTORICAL LOAN DISCOUNT BALANCE & ACCRETION INCOME (1) Fully tax equivalent using an effective tax rate of 26.135%. (2) Core loan yield and core net interest margin exclude accretion and are non - GAAP measurements. See Appendix for non - GAAP reconcil iations. 24 Net Interest Income 2021 SCHEDULED
Slide 25: Management's Outlook: Interest Income and Expense
Category Q1 - 21 Linked Quarter Change Management’s Outlook Interest Income Down $9.7 million Primarily driven by lower loan volume and a $2.4 million decrease in accretion income, which was partially offset by a $4.4 million increase in the security portfolio. Management anticipates the following f
Slide 26: Management's Outlook: Provision and Expenses
Category Q1 - 21 Linked Quarter Change Management’s Outlook Provision Expense Down $5.5 million Provision expense was lower in Q1 21 due to an improvement in Moody’s Economic Scenario Forecast, decline in loan portfolio and a decline in non - performing loans. The $1.4 million in provision expense i
Slide 27: Branch Rightsizing Initiative
Branch Rightsizing Initiative 27 Branch Sales Branch Closings Will continue to review other branch rightsizing opportunities Location Date Sold Number of Branches Deposits in millions Loans in millions Gain on Sale in millions South TX Feb. 2020 5 $140 $261 $5.9 Colorado May 2020 4 $63 $121 $2.2 Ill
Slide 28: Key Ratios Adjusted for PPP Loans
As of and for the quarter ended March 31, 2021 Including PPP Loans Excluding PPP Loans (1) Loan yield 4.75% 4.71% Core Loan Yield (1) 4.53% 4.48% Allowance for Credit Losses to Total Loans 1.93% 2.06% Stockholders’ Equity to Total Assets 12.55% 13.00% Tangible Common Equity to Tangible Assets (1) 7.
Slide 29: Performance Trends
(1) As of December 31, except where otherwise noted. (2) Efficiency ratio is core non - interest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and non - interest revenues, excluding gains and losses from secu
Slide 30: Performance Trends: ROA, ROTCE, ROACE
Note: Core figures exclude non - core income and expense items (e.g., early retirement program costs, gain on early retirement of trust preferred securities, gain on sale of branches, gain on sale of insurance lines of business, donation to the Simmons Foundation, one - time tax adjustment, merger r
Slide 31: Performance Trends: Diluted EPS and Net Income
(1) Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred on Febr uary 8, 2018. Note: Core figures exclude non - core income and expense items (e.g., early retirement program costs, gain on early retirement of trust preferred secu
Slide 32: Corporate Profile and Company Highlights
CORPORATE PROFILE AND COMPANY HIGHLIGHTS 32
Slide 33: Company Profile
(1) As of March 31, 2021, unless otherwise noted. (2) Based on April 13, 2021 closing stock price of $28.95 and number of shares outstanding as of that date. (3) Loan and deposit figures in billions. The balances include only those assigned to the division (the balances do not include o the r busine
Slide 34: Selected Business Units
As of and for the quarter ended March 31, 2021 34 Selected Business Units ▪ $175 million nationwide credit card portfolio ▪ Loan yield (including fees): 13.2% ▪ History of excellent credit quality (1.39% YTD net charge - off ratio) INVESTMENTS ▪ Retail investments services provided through networkin
Slide 35: Digital Banking Accomplishments 2020
35 Single Digital Platform Consolidated three legacy platforms into a single consistent digital experience for all Simmons Bank consumer customers Customer Experience Center New innovation space for testing our ideas with real users to deliver superior digital experiences for our customers Credit Ca
Slide 36: Acquisitions Since 2013
(1) Purchase price and ratios as of closed date. Source: S&P Global Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. 36 Acquisitions Since 2013 2013 – 2014 Consolidated eight charters to one National to State Charter Conversion (Fed Member Bank) 2015 2016 2017 2019 $ I
Slide 37: 112 Years of Consistent Dividend History
(1) Based on April 13, 2021 closing stock price of $28.95. (2) Q1 2021 EPS of $0.62. (3) Q1 2021 Core EPS of $0.59, excludes non - core income and expense items and is a non - GAAP measurement. See Appendix for non - GAAP r econciliations. Note: The future payment of dividends is not guaranteed and
Slide 38: YTD Total Shareholder Return
(25.0%) (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% Dividend + Stock Appreciation (12/31/20 – 4/13/21) Note: Based on April 13, 2021 closing stock price of $28.95. Source: S&P Global Marke
Slide 39: Long-term Shareholder Return
(75.0%) (55.0%) (35.0%) (15.0%) 5.0% 25.0% 45.0% 65.0% 85.0% 105.0% 125.0% 145.0% 165.0% 185.0% 205.0% 225.0% 245.0% Dividend + Stock Appreciation (12/31/07 – 4/13/21) Note: Based on April 13, 2021 closing stock price of $28.95. Source: S&P Global Market Intelligence 39 Long - term Shareholder Retur
Slide 40: Investment Profile
Source: S&P Global Market Intelligence (1) Core EPS excludes non - core income and expense items and is a non - GAAP measurement. See Appendix for non - GAAP reconciliations. (2) Based upon the Company’s average six analyst consensus EPS of $2.13 for 2021 and $2.09 for 2022 (analyst’s published esti
Slide 41: Appendix
APPENDIX 41
Slide 42: Non-GAAP Reconciliations: Core Earnings
(1) Effective tax rate of 26.135% for 2018 - 2021 and 39.225% for 2017, adjusted for non - deductible merger - related costs and deferr ed tax items on P&C insurance sale. (2) Tax adjustment to revalue deferred tax assets and liabilities to account for the future impact of lower corporate tax. 42 No
Slide 43: Non-GAAP Reconciliations: Diluted EPS
(1) Effective tax rate of 26.135% for 2018 - 2021 and 39.225% for prior periods, adjusted for non - deductible merger - related costs a nd deferred tax items on P&C insurance sale. (2) Tax adjustment to revalue deferred tax assets and liabilities to account for the future impact of lower corporate t
Slide 44: Non-GAAP Reconciliations: Core ROA and ROTCE
44 Non - GAAP Reconciliations Q1 Q1 $ in thousands 2017 2018 2019 2020 2020 2021 Calculation of Core Return on Average Assets Net income available to common stockholders $ 92,940 $ 215,713 $ 237,828 $ 254,852 $ 77,223 $ 67,407 Net non - core items, net of taxes, adjustment (non - GAAP) 26,109 4,520
Slide 45: Non-GAAP Reconciliations: Non-interest Income to Revenue
45 Non - GAAP Reconciliations Q1 Q1 $ in thousands 2017 2018 2019 2020 2020 2021 Calculation of Non - interest Income to Revenue Net Interest Income $ 354,930 $ 552,552 $ 601,753 $ 639,734 $ 167,483 $ 146,681 Non - interest income 138,765 143,896 205,031 48,528 82,394 51,903 Total Revenue (GAAP) $ 4
Slide 46: Non-GAAP Reconciliations: Efficiency Ratio
(1) Effective tax rate of 26.135% (2) Efficiency ratio is core non - interest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions an
Slide 47: Non-GAAP Reconciliations: Core Net Interest Margin
47 Non - GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands, except per share and share count 2020 2020 2020 2020 2021 Calculation of Core Net Interest Margin Net interest income $ 167,483 $ 163,681 $ 153,610 $ 154,960 $ 146,681 Fully tax - equivalent adjustment 2,305 2,350 2,864 3,482 4,163 Fully t
Slide 48: Non-GAAP Reconciliations: Book Value and Tangible Book Value
48 Non - GAAP Reconciliations Q1 $ in thousands, except per share and share count 2017 2018 2019 2020 2021 Calculation of Book Value and Tangible Book Value per Share Total common stockholders' equity $ 2,084,564 $ 2,246,434 $ 2,988,157 $ 2,975,889 $ 2,930,008 Intangible assets: Goodwill (842,651) (
Slide 49: Non-GAAP Reconciliations: Core Loan Yield
49 Non - GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands 2020 2020 2020 2020 2021 Calculation of Core Loan Yield Loan interest income (FTE) $ 187,566 $ 177,168 $ 163,379 $ 160,306 $ 146,601 Total accretable yield (11,837) (11,723) (8,948) (8,999) (6,630) Core loan interest income (non - GAAP) 175
Slide 50: Non-GAAP Reconciliations: Tangible Common Equity to Tangible Assets
Non - GAAP Reconciliations 50 Q1 $ in thousands 2021 Calculation of Tangible Common Equity to Tangible Assets Total stockholders' equity $ 2,930,775 Preferred stock (767) Total common stockholders' equity 2,930,008 Intangible assets: Goodwill (1,075,305) Other intangible assets (107,091) Total intan
Slide 51: Non-GAAP Reconciliations: ACL / Loans Excluding PPP
Non - GAAP Reconciliations 51 Q2 Q3 Q4 Q1 $ in thousands 2020 2020 2020 2021 Calculation of ACL / Loans (exluding PPP Loans) Total loans $ 14,606,900 $ 14,017,442 $ 12,900,897 $ 12,195,873 Allowance for credit losses on loans $ 231,643 $ 248,251 $ 238,050 $ 235,116 ACL / Loans 1.59% 1.77% 1.85% 1.93
Slide 52: Non-GAAP Reconciliations: Tier 1 Leverage Ratio
Non - GAAP Reconciliations 52 Q1 $ in thousands 2021 Calculation of Regulatory Tier 1 Leverage Ratio Excluding Average PPP Loans Total Tier 1 capital $ 1,939,868 Adjusted average assets for leverage ratio $ 21,668,406 Average PPP loans (891,070) Adjusted average assets excluding average PPP loans (n
Slide 53: Our lights are red in honor of #RedCrossMonth
| NASDAQ: SFNC Our lights are red in honor of # RedCrossMonth
Simmons First National — Q1 2021 Earnings Presentation on 6ix